National economy will recover slowly, but Louisiana will get energy-related boost

The national economy will creep slowly out of its funk and post modest growth in coming years, but Louisiana will regain strength more quickly, the chief economist of Regions Bank said in New Orleans this week.

"The difference in Louisiana and a few other states is energy," said Robert Allsbrook, who met with bank customers in New Orleans this week.

The global appetite for energy, fueled by rapidly growing economies like China, will continue to expand faster than fuel supplies. Energy prices will likely keep climbing. Both of those trends are good for Louisiana, Allsbrook said.

Meanwhile, the shipping and transportation sectors, which also play a significant role in the state's economy, proved more sensitive during the economic downturn but are beginning to pick back up, he said.

In recent decades the nation as a whole has experienced long-term annual growth of roughly 3 percent. But Allsbrook said that over the next decade, the country's gross domestic product, a measure of the nation's overall economic output, will likely grow closer to 2 percent annually.

"We're growing. The recession is over. But we're going to grow at a slow rate for a long time," he said.

Allsbrook also said he doesn't believe the nation will experience a double-dip recession, where the recovering economy briefly slips back into negative territory.

"We're not going to double-dip," he said. "The government will not allow it. This political process cannot tolerate a recession. The economy is too fragile right now."

One reason why the national economy will grow slowly in coming years is that the recession forced consumers -- whose spending collectively accounts for two-thirds of all economic activity -- to make long-term changes in their financial behavior.

"The depth and breadth of the decline in the economy is so unusual that it has affected the way we behave," Allsbrook said. "We aren't buying Gucci bags anymore. We're buying bags. Conspicuous, ostentatious consumption is (considered) embarrassing."

Many Americans came close to losing their homes during the meltdown, or know someone who did. Those brushes with financial distress "affect your behavior the rest of your life," he said.

As a result, Americans are saving more, trying to pay down their debt, and controlling spending. They are postponing retirement, repairing older vehicles rather than buying new ones, and using layaway plans -- not credit cards -- to make purchases.

Allsbrook believes the behavioral changes could last at least 20 years, which would mean the recent recession was about as impactful on consumers today as the Great Depression was on consumers in the 1930s.

"This is a long-term tsunami sea change," he said.

As a result, Allsbrook says the economy will settle down into a new era with less robust growth and less spending.

"Where you are now is where you'll be for a while," he said. "This is the new reality."

Kimberly Quillen can be reached at kquillen@timespicayune.com or 504.826.3416.